Portugal’s deficit for 2016 was down by €497 million and the total "will not exceed 2.3% of GDP," according to a statement today from the Ministry of Finance.
The total deficit was €4.256 billion, primarily resulting from less government expenditure and an increase in Social Security income as more people were in employment.
The Ministry of Finance stated that, "compared to the figure projected in the 2016 State Budget, the deficit was €1.238 billion below forecast, to a large extent resulting from the containment of the actual expenditure, which was €3.009 billion below the budgeted figure."
This result means the deficit in Portugal’s national accounts, which will be presented to the European Commission, "will not exceed 2.3 % of GDP."
The ministry also indicated that tax revenue increased due to the government's tax recovery programme, the Special Program for Reducing State Debt (PERES), which gave taxpayers incentives to pay up, but also to increased due to Social Security debts being paid off by offering a total or partial pardon of interest and costs.
Social Security contributions were up 5.2% boosted by those in paid employment.
Overall, the results will be better than those expected by the European Commission.
In 2016, António Costa's government pledged to reduce the budget deficit to 2.4% of the Gross Domestic Product. The target set by Brussels was for a deficit of 2.5% of GDP .
The final figure will be reported in March and should not vary from a 2.3% deficit. Things are looking better for the Finance Minister and tfor he government whose gamble on increasing consumer expenditure through income tax cuts, boosted by some welcome employment figures, seem to have achieved the desired result.
Speaking to reporters after a meeting of eurozone finance ministers, in which the European Commission and the European Central Bank reported on the findings of the fifth post-programme monitoring mission (held in Portugal at the end of last year), Portugal’s Finance Minister, Mario Centeno noted, "there are the figures," to show he was right and his detractors were wrong.
Portugal is on the right track, "with a deficit that is consistently below 3%", added Centeno who suggested that many of his Euro colleagues may have been deceived during 2016 into thinking Portugal was slipping behind.
Clearly annoyed at the wave of poor press he has been receving, Centeno made the most of the good deficit figures to suggest that people should be “more leinient in their comments,” meaning his colleagues but mentioning no names.
"I think I have seen very clearly in this meeting that it is very important that communication improves, that the use of information improves, that policy and performance analysis is a little less passionate and rather more rational.”
Centeno reiterated that the current Government took office, "in a situation in which internal and external confidence in Portugal was low," and that "2016 was a year of consolidation of an economic recovery but also in confidence levels."
"At the moment, the numbers are there, they prove that the commitments we made were serious, that they had a basis to be implemented," said the minister.
"We have always kept to commitments, and we have shown very clearly the country's determination to fulfill its commitments."
